Claiming Social Security Benefits

One of the most important decisions that an American consumer will make as they near or reach retirement age is deciding when to actually start collecting their Social Security benefits. One of the biggest questions is going to be whether to start collecting them at the age of 62, when it’s possible, or at the “full” retirement age of 66.

Below are three important factors that you should know if you’re a retiree, or will be one soon, before you make the decision to start receiving your Social Security benefits. Enjoy.

The first is that the amount you receive monthly will depend on how much income you earned during your working life that was eligible for Social Security benefits, and also when you decide to start receiving those benefits.

Social Security has chosen 66 as the year for full retirement and, if you wait until that age, you’ll get the full benefit you’re due. If you decide to start receiving them early however, for every month early your benefits will be reduced. For example, if you choose to start getting them at age 62 instead of 66, your benefits will be 25% less. On the other hand, if you wait until you’re 70 years old you’ll increase your benefits by 8% per year, or 32%.

This next factor might be somewhat confusing because, let’s face it, Social Security was designed by the federal government. It’s the fact that, for the average consumer, it really doesn’t matter when you apply and start receiving your benefits because the Social Security Administration designed their program to average the lifetime payments out so that, no matter when you start receiving them, you still get the same amount of money in the end.

What that means is that, for most American consumers, getting smaller checks if you start receiving benefits early won’t last for the rest of your life.

Lastly there’s the simply the fact that, if your quality of life demands that you have extra money and need your social security payments, you should start taking them. On the other hand, if you don’t, then you should defer them as long as possible. For many American consumers, 62 is the age for starting to claim benefits simply because they need them in order to either get by or stay at their current standard of living. If that’s not you then by all means wait.

The most important thing to keep in mind when you’re considering the decision to start receiving your Social Security payments and that retirement is all about you. Retirement should be a time of comfort, reflection and hopefully even a bit of leisure and, when deciding whether or not to start receiving your Social Security benefits early, sometimes crunching the numbers isn’t exactly useful.